Treasury Department Delays Employer Mandate for Mid-Size Employers


Last week, the Treasury Department issued a final rule, with an accompanying press release and fact sheet, in which it delayed, for a second time, the employer mandate requiring mid-size employers with 50-99 full-time employees to provide affordable health insurance coverage to their full-time employees. 

Under the Affordable Care Act (ACA), mid-size employers with 50-99 employees were originally supposed to offer “minimum essential coverage” to their employees that work at least 30 hours a week in 2014, but the administration had previously delayed that requirement until 2015.  The final rule issued last week delayed the requirement again, now until 2016, which many have noted is after the election cycle.  In addition, the final rule stated that the mandate that applies to large employers with 100 or more employees would be phased-in, so that instead of having to cover 95% of their full-time employees by 2015, large employers now have until 2016 to meet the 95% benchmark and, in 2015, need only meet a 70% coverage benchmark.  Large- and mid-size employers that do not meet these benchmarks will pay a fine, called an “employer responsibility payment,” of $2,000 per employee above the first 30 employees.  Employers with fewer than 50 employees are not subject to any mandate or fines under the ACA. 

The upshot of the newly announced delays is that in 2015 only employers with 100 or more full-time workers will have to pay fines, and only if they do not cover at least 70% of their full-time workers.  To provide an idea of the scope of these rules, companies with at least 100 employees employ 66% of U.S. workers while companies with 50-99 employees employ 7% of workers. 

The 220+ page final rule also clarified that volunteer employees will not be considered employees for purposes of the mandate, a relief to municipalities with volunteer fire departments or paramedics, and provided additional clarification regarding the treatment of seasonal employees, adjunct professors, and other unique employment relationships. 

While the announcement was welcomed by many employers, it was also controversial because of allegations that there was a political motivation in delaying the employer mandate until after the mid-term election and that the delay violated the explicit requirements of the ACA and therefore exceeded the administration’s authority.

Reporter, Daniel J. Hettich, Washington, D.C., +1 202 626 9128,

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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